November 20 to 26, 2016 is the Education Savings Week. You can take part in Education Savings Week by opening a Registered Education Saving Plan (RESP) account. The RESP is a government-registered saving plan to help you save for a child’s post-secondary education.
According to the Financial Consumer Agency of Canada, here are some key features of RESPs:
- Anyone can open an RESP for a child—parents, grandparents, guardians, and other relatives and friends.
- When you contribute to an RESP, you become eligible for government grantsthat can amount to thousands of dollars of free money towards a child’s post-secondary education.
- Money in the RESP grows tax free.
- You can open an RESP for a child as soon as they are born (if both you and the child have a social insurance number).
- There are no annual contributions limits to RESPs but there is a lifetime limit of $50,000 per child.
- A child can be named the beneficiary of more than one RESP. For example, parents and grandparents could each open an RESP for the same child; however, the combined total of the two RESPs could not be more than $50,000.
- If you’ve reached the maximum value of the government grantsthat you are eligible for with an RESP, then a Tax-Free Savings Account (TFSA) may be a good alternative to putting money away for a child’s education.
- You can open an RESP at most financial institutions.
For more information regarding RESP, please Canada Revenue Agency’s website.